Apparel is cash intensive because you pay for goods long before customers pay you. Brands fail on timing far more often than on margin.
When money leaves
- Development and sampling, before any revenue exists
- Fabric deposits, often before production is scheduled
- Production deposit at order placement
- Balance on completion, usually before shipping
- Photography, packaging and launch costs
When money returns
Direct to consumer revenue arrives as units sell, which is gradual. Wholesale revenue arrives on payment terms after delivery, which can be a further month or two. Either way, the gap between outflow and inflow is measured in months.
The trap of ordering more to save
A lower unit price at higher quantity converts cash into inventory. If the inventory sells slowly, the saving is theoretical while the cash shortage is immediate.
Practical mitigations
- Produce shorter runs and reorder proven styles
- Negotiate payment terms in stages tied to milestones
- Take pre orders where your audience supports it
- Prioritise reorders, which need no development spend
- Keep style count tight so capital is concentrated
Model it before you commit
Write out the actual dates money leaves and the realistic dates it returns. That schedule, not the margin percentage, determines whether the run is survivable.